A few times a year, a real estate headhunter calls me to ask if my team wants to join their designated agency company. (I’ll explain “designated agency” later). Recruiters are mostly very good at their job, not just reading a script. Their job is to get my team to move with me to their company and bring our client base with us. Each time I get this kind of call, I have to explain why my client base does not want us to make this move.
Some of them get it; most of them don’t.
The job of the recruiter is to make a broker (me) uncomfortable with their current situation, then show how the big company will solve all those problems for the broker. This was the second conversation with a guy who wasn’t really listening the first time. He started with what a nice conversation we had last time. He told me how impressed he is with my company.
Then he said, “Do you have a plan to cope with the market changing?” He was referring to real estate demand going down. This is supposed to make me uncomfortable. I am supposed to be worried that selling properties is going to get harder!
Some background on the market: Since June 2020, selling real estate has been very easy here, once the broker secured a listing. It is a rare property that couldn’t be marketed successfully, since there were more buyers than sellers. The recruiter thought my team might feel insecure about being able to sell a property effectively in a fair market. He expected me to want their help with that.
As exclusive buyer’s agents, we had to struggle to support our clients being able to purchase with the typical safeguards of having an inspection and getting a contingency for completing their mortgage. It has been hard, and we are happy to see the end of it. We worked harder in 2020 and 2021 than in previous years. As it turned out, 2021 was our best year ever.
This spring (beginning April or so, 2022), we saw a drop in demand and a more fair market begin to emerge. The reason was economic. Interest rates went up, and there are rumblings about unemployment.
Suddenly, there were houses that did not have bidding wars; where there might have been ten offers, there were two, or none. Our clients’ offers are getting accepted. They are getting accepted without argument about having the consumer protective contingencies (inspection and mortgage contingency) included. Some were getting their offers accepted significantly below asking price.
So, how did I answer the recruiter about being prepared for the market to change?
The market change that my office did have to prepare for was in June 2020. We developed strategies to support our clients’ offers in a more competitive market. That was when we had to work hard to adapt to listing agents who created arbitrary deadlines and pressured buyers to bid high, bid quickly, and give up their rights.
The market change this spring, 2022, did not require us to pivot. It improved the process for our clients. As we saw the market starting to change this spring, we were able to return to our usual strategies for making offers in a more normally competitive market.
If you understood my business model, you would understand that when agents work only for buyers, we see the waning seller’s boom market as a good thing. A market that is less lopsided in favor of seller’s is better for our clients. Were we in your firm in June 2020, our coworkers would be the people who were actively making it harder for us and for our clients.
Then I reminded him that we are exclusive buyer’s agents. We do not practice designated agency. Our clients like it that way, and we do, too.
What is designated agency?
Most agents work in companies who represent both buyers and sellers; that’s designated agency. The broker or manager is supervising agents on both sides of a transaction when a buyer’s agent brings a buyer to a house listed by that company. Each side has a financial responsibility to work for the best price and terms for their clients.
In designated agency, a broker or manager designates an agent or named team to either work for the seller or work for a buyer client. The seller’s agent must work for the highest price, the buyer’s agent for the lowest. In many companies, individual agents will work with buyers some of the time, sellers some of the time.
We don’t practice designated agency.
Our agents work cooperatively. We can do that because no one in our office is trying to get the best deal for a seller. Our focus can stay on what is working for buyers in the current market. We don’t have agents who are negotiating against one another, as buyer vs seller agent.
There are very few brokerages in Massachusetts who choose to only work on one side. Why? Because working on both sides is more lucrative. My goal, as a broker, was to work as conflict-free as possible and be able to share and learn with my colleagues. It works for us. I think it works for our clients.